The interpretation of the term 'no suit for recovery of money' in Section 22 (1) of the Act and the limited interpretation of the prohibitions contained therein.

A. V. SRINIVASA REDDY, J.

( 1 ) IN this appeal, the appellant calls in question the correctness and validity of the order passed by the learned single judge in W. P. No. 16606 of 1990.

( 2 ) THE facts in brief are :

The appellant is a public limited company declared to be a sick industry by the Board for industrial and Financial Reconstruction (in short "bifr") under the provisions of the Sick industrial Companies (Special Provisions) Act, 1985 ("the Act" for short ). The Board is considering the proposal for revival. When the revival proposals were under the consideration of bifr some of the depositors who deposited money with the appellant-company filed applications before the Company Law Board under Section 58a (9) of the Companies Act, 1956. The Company Law Board allowed the applications of the depositors holding that the provisions of Section 22 of the Act are not attracted to the proceedings under Section 58a (9) of the companies Act. Aggrieved, the appellant filed the writ petition. The learned single judge dismissed the writ petition. Hence, the appeal,

( 3 ) WE have heard learned counsel on both sides.

( 4 ) THE question for our consideration is whether the Section 22 of the Act extends to and attracts proceedings under Section 58a (9) of the Companies Act, 1956.

( 5 ) THE learned single judge after elaborate consideration of the matter answered the question in the negative. In order to appreciate the rival contentions of learned counsel for the parties and answer the question, it is necessary to extract Section 22 (1) of the Act. It reads :

"22 (1 ). Suspension of legal proceedings, contracts, etc.--Where in respect of an industrial company, an inquiry under Section 16 is pending or any scheme referred to under Section 17 is under preparation for consideration or a sanctioned scheme is under implementation or where an appeal under Section 25 relating to an industrial company is pending, then, notwithstanding, anything contained in the Companies Act, 1956 (1 of 1956), or any other law or the memorandum and articles of association of the industrial company or any other instrument having effect under the said Act or other law, no proceeding for the winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company or for the appointment of a receiver in respect thereof and no suit for the recovery of money or for the enforcement of any security against the industrial company or of any guarantee in respect of any loans or advance granted to the industrial company shall lie or be proceeded with further, except with the consent of the Board, or, as the case may be, the Appellate authority. " (emphasis' supplied)

( 6 ) THE only facet of Section 22 (1) of the Act that can be said to be of some relevance to the present appeal is the relief for recovery of money that is prohibited under the Act in respect of a company under revival by the BIFR. The question is whether the claim for return of deposit could be termed as "suit for recovery of money" against the company. If the answer is in the affirmative then the appellant-company would succeed and not otherwise.

( 7 ) THE term "deposit" has been defined by the Explanation to Section 58a as a deposit of money with a company including an amount borrowed by it but excluding such categories of amount as may be prescribed in consultation with the Reserve Bank of India. The learned single judge has considered this question in detail. He has placed reliance on the decision of the Supreme Court (sic) in Vijay Mills Co. Ltd. v. State of Gujarat [1990] 68 Comp Cas 597. The apex court had occasion in that case to decide the question whether the provisions contained in Section 22 (1) of the Act extended to criminal prosecution of the company for its failure to pay the amount of sales tax recovered by it on behalf of the Government from the customers. The apex court held that the amount recovered from the customers by the c

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